By Hayden Briscoe and Hua Cheng, AllianceBernstein
In spite of worries about a collapse in China’s property market, we think that the financial system will navigate the coming credit cycle if banks can buy time to resolve loan problems — and receive government support if needed. Continue reading »
By Hayden Briscoe and Jenny Zeng, AllianceBernstein.
Concerns about a possible collapse in China’s property market continue to grow. However, our research suggests that fundamentals are more robust than many people think. The biggest danger lies in the potential for policy mistakes.
Investors are understandably worried about the headlines coming out of China’s property sector. Sales fell in July after having seemed to stabilize in June. For the first half of this year, sales nationally fell by 6.7% year over year, to Rmb3tn (US$488.4bn). That’s the first time such a steep fall has occurred since 2011. Continue reading »
China’s property slump – which in July was characterised by widespread declines in city real estate prices coupled with falling sales volumes – appears to have carried over into August, data for the first half of the month shows.
Data from 42 large cities monitored by China Confidential, a research service at the Financial Times, shows a 20 per cent year on year decrease in home sales in the first 17 days of August. Unsold inventory in 14 large cities jumped by 48 per cent year on year in the same period, the data shows (see chart). Continue reading »
China’s property market – seen by some as the biggest risk facing the global economy – appears to be weakening across the board as construction activity cools, land sales slow, apartment sales slide, unsold inventory rises, financing grows tighter and the sentiment of developers slumps markedly, according to a quarterly survey conducted by Standard Chartered Bank.
“Our Developers Sentiment Index suggests that the worst times are still ahead for many developers,” concluded the Standard Chartered report authored by Lan Shen and Stephen Green. The survey polled 30 senior managers at real estate developers in June-July in six cities – Hangzhou, Foshan, Huangshi, Baoding, Lanzhou and Nanchong – on current market conditions and expectations.
The results were almost uniformly gloomy Continue reading »
By Ben Simpfendorfer of Silk Road Associates
The Yuecheng in Beijing’s southern suburbs is a pleasant looking senior living home. Its main living room is full of books, potted plants, and mahjong tables. Its bedrooms are bright and well equipped and little different from the rooms that many might be used to seeing in Europe or the US.
Indeed, to the casual observer, the Yuecheng appears to be a pin-up for the commercial opportunities of selling to China’s growing ranks of elderly people. But that’s why it’s also misleading. Continue reading »
Banks intensified their squeeze on mortgage borrowers in China in June, contributing to another sharp decline in real estate sales for the month and ratcheting up the pressure on several city government finances.
Data collected by China Confidential, a research service on China at the Financial Times, showed that only 5 per cent of first time buyers were able to secure a mortgage below the benchmark interest rate. This compared with 8 per cent in May and 39 per cent in June 2013, according to China Confidential’s monthly survey of 300 real estate developer sales offices in 40 cities across the country. Continue reading »
By Qu Hongbin, Co-Head of Asian Economic Research, HSBC
For many, China’s growth model, which has delivered average annual GDP growth of 10 per cent over the past three decades, simply looks wrong: a national savings rate of around 50 per cent is unheard of in a large, modern economy.
A typical diagnosis states that China invests too much and consumes too little. The prescription is “rebalancing” – moving the economy away from investment towards consumption-led growth. However, a consumption-led growth model has little in theory or evidence to support it. Continue reading »
More bad news for China’s property market. Not only is the People’s Daily quashing hopes for a real estate stimulus, but data from 42 of the country’s most significant cities is showing a declining trend for property sales in the first half of June.
Home sales from the 42 cities, monitored by China Confidential, fell 16 per cent in the first 15 days of the month from the same period in May. This followed some signs of recovery in May, when transactions rose 4 per cent month on month.
On a year on year basis, property unit sales fell 29 per cent, representing a deepening of the declining trend seen in May – when sales were down 14 per cent year on year – and in April, when sales were down 23 per cent. Continue reading »
As Jamil Anderlini, the FT’s Beijing bureau chief, wrote this week, China’s property bubble is on the point of bursting. But what is likely to happen next? Some bubbles expire with a resounding pop, others fizzle after a few pyrotechnics while still others deflate in a more stately manner over time.
The denouement of China’s real estate exuberance could play out in several ways and Beijing, as ever, can do much to influence events. But here is an attempt to isolate three particularly combustible areas – or “time bombs” – which could turn incendiary and detonate with a shower of collateral damage. Continue reading »
The torrent of bad news for Chinese property developers shows no sign of letting up.
Unsold floor space continued to surge in April. Two small developers are reported to be slipping into financial distress. The total net profits of 117 domestically-listed developers posted a 27 per cent decline in the first quarter to Rmb9.65bn. The bearishness of investment bank analysts, meanwhile, is plumbing new depths. Continue reading »
A manufacturer of construction materials has become the first Chinese company to default on a domestic junk bond, a state-owned Chinese newspaper said on Tuesday, compounding investor concerns over which mainland issuers could be next to miss debt repayment obligations.
Xuzhou Zhongsen Tonghao, based in the prosperous but highly indebted province of Jiangsu, was unable to meet interest payments on Rmb180m (US$29m) in bonds it sold to domestic investors last year, according to the 21st Century Business Herald, a state-owned newspaper. The missed interest payment was estimated at Rmb18m, given the 10 per cent coupon on the bond, and took place last Friday. Continue reading »
Real estate sales in China appear to have slumped during March, compounding investor concerns that more smaller, weaker property developers may be heading for debt defaults.
Data from 42 cities monitored by China Confidential, a research service at the Financial Times, showed that sales volumes during the first 23 days of March were down 34 per cent from the same period a year earlier. Continue reading »
Just when world markets need them least, new signs of underlying economic weakness are emerging from China.
Data from China Confidential, an FT research service on China, show that the real estate market – one of the key 2013 engines of Chinese growth – is starting to sputter. Continue reading »
There is nothing that the west – and we in the western media – love to hate more than when Chinese money threatens to take a chunk of the free media that we see as a cornerstone of our democracies. So when a Chinese recycling millionaire said he was buying the New York Times, we either squealed with outrage or denounced it as a publicity stunt (which it seems that it was). Continue reading »
Like its American counterpart, the Chinese dream remains a rather abstract idea. But that doesn’t stop the leadership in Beijing talking it up – it was a key theme during the recent party plenum.
So where better to see the dream in action than at a show home, designed to entice China’s newly-minted white-collar workers to part with piles of cash? Beyondbrics took a trip to the suburbs of Shenzhen too see how the latest in aspirational living is shaping up. Here are five things we learnt. Continue reading »